Boardroom breaks down why the Fanatics-PointsBet partnership matters, why DraftKings tried to stop it, and what it means moving forward.
Last month, Fanatics continued its foray into the sports betting world by announcing its plan to acquire PointsBet’s US operations, a move that would allow the new-kid-on-the-block company to merge with a proven one in mature markets. The deal was estimated to be worth $150 million in cash and was so far along in the process that the companies released a joint statement.
However, a veteran in the industry was having none of it. As alluded to in the statement, there was work still left to be done, but that became even more apparent when DraftKings stepped in at the last minute to one-up the emerging sports betting brand, offering $45 million more than the initial agreement between Fanatics and PointsBet.
Because the bid still needed to be made official, DraftKings and PointsBet negotiated in the weeks that followed in hopes of finalizing the bid, but that never came to be — DraftKings missed its deadline to finalize an offer.
In turn, Fanatics — which is valued at $31 billion — upped its offer by 50% to $225 million which PointsBet called “superior in terms of both pricing and certainty of being able to complete on a timely basis.” PointsBet’s board is in unanimous agreement on accepting the offer from the Michael Rubin-led company, with PB shareholders set to vote (and likely approve) on Friday in Australia.
Why This Matters
Fanatics is coming for the sports betting space, whether DraftKings likes it or not. Though it’s pretty clear by the latter’s 11th-hour bid to stop the former from acquiring PointsBet that it is NOT a fan.
Already its own operating entity in the states of Maryland, Massachusetts, Ohio, and Tennessee, the move will allow Fanatics to merge with a proven force in the sports betting space. PointsBet’s current US online operations exist in 15 states, including in mature markets such as New York, New Jersey, Pennsylvania, and Michigan. For reference, those four states all sit in the top 10 of lifetime sports betting handle, with New Jersey in a healthy first position at nearly $40 billion.
While Fanatics will still need to be vetted in each respective state, the soon-to-be-official acquisition will allow the company to nearly immediately jump into markets it may have had trouble getting licensing for independent of the merger. And with industry experts expecting Fanatics to compete with the big boys right away, it’s no wonder DraftKings came in and attempted to halt its competitor’s momentum, despite not really needing PointsBet.
Consider this: DK already exists and is operational in almost every state that PointsBet does. It’s also already well-established, with a team and resources in place to handle the risks that come in such a volatile space, something that perhaps Fanatics is still working on as it navigates a new industry.
Simply put: DraftKings attempted to block the sale in an attempt to prevent the emergence of a well-funded competitor. It failed to do so, and now Rubin and Co. are coming for some of the country’s biggest and most robust sports betting markets.
In addition to taking over online sportsbook operations, Fanatics branding will likely begin to appear at in-person PointsBet-led sportsbooks across the country.
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